I'm sick and tired of Safaricom's M-PESA. I don't want to receive neither do I want to send money via M-PESA; and I bet there are a significant number of Kenyans that are equally sick. My sickness started when Safaricom decided to categorized amounts for transfer into bands with each band charged at different rates away from the previous standard of Shs 30. A few months later Safaricom increased those rates by 10% (they blamed it on excise duty so I'll let that pass); then recently they increased the rates by 27% and boldly lied that the rates had been reduced.
Someone should reign in on them.
This someone could be Communications Authority or Parliament or Central Bank - or just someone who is mindful of the outcry that's starting to brew among Kenyans. But given that the country is following a free market policy (even though there is price fixing in the oil industry), and most importantly the fact that the government itself is a major shareholder in Safaricom, I do not think those institutions will do anything to reign on Safaricom. Cofek is also quiet.
See also: Is Safaricom too big to regulate?
Someone might think that I am angry at Safaricom for nothing - far from it. Foremost, transacting via M-PESA ought to be cheaper than transacting via Banks. Take a look at this table for the new rates of sending and withdrawing money via M-PESA:
If for instance you would want to transact Shs 100,000 via M-PESA, you will need to spend shs 220 as you will need to first transfer shs 70,000 then transfer another shs 30,000 both charged at shs 110 to transfer. After that the recipient will need to spend a further Shs 517 (shs 330 plus shs 187) for withdrawal. Total transaction fees comes to shs 737.
This then means if you are living in the same town or even nearby towns like Nakuru and Nairobi that's only shs 300 apart, and if you don't mind the security risk and time involved, then you are better off traveling to the recipient to deliver the cash physically as your return trip will be cheaper by shs 137. Or probably you should use bank transfer that will save you more than shs 550, see below .
If you chose to transact via Equity Bank using Eazzy 247, you would have spent shs 60 to send the cash. The recipient, if he opted to use over the counter withdrawal, could spend shs 110 or he could opt to save by withdrawing via ATM at shs 33. In total therefore, the transaction could have cost both of you a maximum shs 173; a figure that's 21.9% cheaper than transacting via M-PESA or to say it the other way round, to transact via M-PESA is 426% or 4.26 times more expensive than transacting the same Shs 100,000 via Equity Bank - and that's when the withdrawal at the bank has followed the more expensive route of over the counter withdrawal.
Airtel and Orange should paint the country red and orange
Airtel and Orange are poised to offer the needed competition in this mobile money transfer business even before Equitel takes off thanks to their low cost in transaction fees via their mobile money platforms. For instance, from the table below that shows the rates for Airtel Money, we can also calculate the amount one would spend to transact shs 100,000.
As clearly seen, to send Shs 100,000 from Airtel to any mobile number is free. The recipient on the other hand will spend only shs 300 plus shs 170 coming to a total of shs 470 which is shs 267 (about 40%) cheaper than transacting the same amount via M-PESA.
The rates by Orange Money are also given in the table below for comparison purposes:
Even though the saving via Airtel Money and Orange Money is not as much as saving via bank transfer, many Kenyans would opt to transact via the two.
Only if the telecos took advantage of the freed M-PESA agents faster.
Safaricom freed the M-PESA agents to engage with other mobile money providers like Airtel Money and Orange Money since June this year, yet the advantage offered by the opening up of the agents hasn't been utilized by these two. One way both Airtel and Orange could take advantage of the M-PESA agencies is to paint most of those M-PESA kiosks in red and orange, adorning the entire country in their colors. The next thing I would expect from them is to go into marketing overdrive, OLX style, in ensuring that Airtel Money or Orange Money is in every TV and radio station and in every print and online media outlet - with clear explanation on how M-PESA is exploiting customers.
I expected both Airtel and Orange to scream Airtel Money and Orange Money everyday; organize for road shows to promote those products, and educate Kenyans on how cheap it is to use their platforms for money transfer; but they are still dilly dallying; until it a bit too late as Equitel is already here.
I don't think anyone should shy away from mentioning outright the exploitation by any company or brand. The truth should and must be said as it is. If Safaricom takes anyone to court for running ads showing how expensive they are, they should lose. Orange, you hear me?
Equitel could be better; waiting to see their withdrawal charges
Even though there are factors that can affect the success of Equitel especially in the adoption of thin sim technology, the plan Equity Bank has for Equitel is great news to Kenyans. We already know that Equity Bank wants to charge a 1% remittance fees at an upper cap of shs 25; meaning sending money from shs10? to shs 2,500 will be at an incremental rate of 1% of the amount to be transferred. However, to transfer any other amount exceeding shs 2,500 one be charged only the upper limit of the Shs 25 upper.
If transferring shs 2,500 is to be taken as a case for comparison, we clearly see that Safaricom is already charging Shs 15 extra as to transfer shs 2,500 will cost you shs 40 on Safaricom. Orange will charge you shs 30 to transfer the same amount and you'll spend nothing to send that amount via Airtel Money.
The problem is the amount you will need to spend to withdraw it. To withdraw shs 2,500 you will need to spend shs 27 on Safaricom, shs 25 on Airtel and shs 25 on Orange. Total transaction fees for Safaricom comes to shs 67, shs 25 for Airtel and shs 55 for Orange. Assuming then that Equitel will retain the Shs 33 ATM withdrawal rates, then to transact shs 2,500 will cost you Shs 58 on Equitel.
The beauty of Equitel is however noticed at transacting Shs 100,000. In this case, the transaction is likely to cost only shs 58 on Equitel, shs 787 on Safaricom, Shs 470 on Airtel and Shs 255 on Orange.
The table below gives the charges each mobile money service provider will ask of you to transact in the bands as determined by Safaricom.
Equitel withdrawal rates have been assumed to be 33 bob across all bands. Equity Bank is to send us correct rates and this table shall be updated accordingly
From the table, it is very clear that you are better off transacting using Equitel, or if their withdrawal charges happen to be way higher than their ATM withdrawals, then you better off for bank to bank (same bank) transfers.
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